German economy expands for ninth consecutive year
Initial figures from the Federal Statistical Office (Destatis) indicate that the German economy expanded for the ninth consecutive year in 2018. Data released on Tuesday morning reveal that price-adjusted gross domestic product (GDP) was 1.5% up on the 2017 figure, after year-on-year gains of 2.2% in both 2016 and 2017. Growth last year was in line with the Bundesbank’s most recently published forecast.
Destatis furthermore announced that German economic activity probably recorded another slight gain on the quarter in the final quarter of 2018, though concrete Q4 data would not be released before February. This comes after seasonally adjusted output in the third quarter shrank by 0.2% on the quarter, raising concerns that Germany might slip into a technical recession – that is, a contraction of GDP for two successive quarters.
Consumption and investment stimulate growth
The Federal Statistical Office reported that domestic factors were the chief growth stimuli, with both consumer spending (up 1.0%) and government consumption (up 1.1%) climbing on the year. Investment in new machinery and equipment and in new buildings also increased, with significantly more investment in public civil engineering work than one year earlier. Other investment, a category which includes, amongst other things, research and development expenditure, was likewise up on 2017, Destatis writes, whilst inventory levels also increased, stimulating growth further. In addition, German exports rose at the 2017 average rate, though not quite as briskly as in the years before that. Imports, meanwhile, were still quite lively.
Record surplus for general government
Destatis also went on to report that general government closed the year with a surplus for the fifth year in a row. Provisional calculations indicate that central, state and local government and the social security funds together registered a record surplus of €59 billion in 2018, up on the previous year’s figure of €34 billion.
The forthcoming issue of the Bundesbank’s Monthly Report, which will be published on 21 January, illuminates how the German economy performed towards the end of last year.